Monday, August 31, 2009
7:11:09 PM EDT

Trigger Monday

by
James Brown

The pull back in AAPL wasn't that bad. Shares traded sideways in a narrow $2.00 range after the initial gap down. Readers may want to wait for a new bounce from $165 or a new rise over $169 to launch call positions. Our first target is $174.00. Our second target is $179.00. FYI: The P&F chart points to a $231 target.

Our new call play on ATI has been opened. The stock dipped back toward round-number support at $30.00. The low was $30.03 and our trigger to buy calls was at $30.25. I'd still jump in now if you missed it. Our first target is $34.50. Our second target is $39.00. Time frame on the first target is only two or three weeks. The $39 target could take several weeks.

The trading action in CF is actually starting to look more bearish lately. The stock is testing its 30-dma and should find additional support near $80.00. CF is tired of playing games with Terra Industries (TRA), the company it's trying to acquire. CF has filed a lawsuit to force TRA to hold its annual meeting, which would give CF a chance to nominate directors to TRA's board of directors (people more friendly to a merger with CF).

Currently our plan is to buy calls on a breakout over resistance with a trigger to launch positions at $85.25. If triggered at $85.25 our stop loss is at $79.75 and our first target is $89.85. Our second target is $97.50. My time frame is four to six weeks. FYI: A breakout over $85.00 would produce a new triple-top breakout buy signal on the Point & Figure chart.

Trading note: Investors should note that Agrium (AGU) has been trying to buy CF for months. CF has been trying to buy Terra Industries (TRA) for months. Nobody is selling because they claim the offers don't fully value the company (a.k.a. it's not enough money). There is potential upside if AGU finally makes a high enough offer or someone else steps in. There is potential downside if CF makes too high a bid for TRA and the market thinks they overpaid. This M&A merger dance hasn't affected the stock much lately but it is a risk either direction.

Picked on August xx at $ xx.xx

EOG Res. Inc. - EOG - close: 72.00 change: -1.25 stop: 69.90

The sell-off in China drug the commodities down. Crude oil collapsed with a $3.00 plunge under $70.00. This weighed on the oil stocks. EOG dipped toward its 50-dma near $71.00. Over the weekend I suggested readers cut back on their position sizes in EOG since the stock's posture looks more bearish. Wait for the bounce before considering new bullish positions.

Our first target is $79.50. Our second target is $88.00. The daily chart is building an inverse H&S pattern that is forecasting a rally toward $100.

*The plan was to trade small from the beginning to cutting our position in half now should leave us with a very small position.

Picked on August 26 at $ 73.25 /gap down entry point
/listed at $73.98
Change since picked: - 1.54
Earnings Date 11/03/09 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on August 22, 2009

FISERV Inc. - FISV - close: 48.25 change: -0.96 stop: 46.60

Hopefully no one was surprised to see a dip in FISV. I've been warning readers to expect a pull back toward the $48.00 level. We got it. I am suggesting readers use this dip or a dip toward the 50-dma as a new bullish entry point to buy calls.
Our first target to take profit is at $52.50. I'm setting a second target to exit completely at $54.00.

FLR is providing traders another bullish entry point with today's pull back. The stock has dipped to its longer-term bullish trendline of higher lows (support) and its 50-dma. More conservative traders could up their stops toward the $51.00 or $51.50 levels if you're feeling super cautious.
FLR has already hit our first target near $55.00. Our second and final target is $59.00.

FLS under performed the rest of the market with a 3.5% decline. Technical indicators are starting to decay. I am not suggesting new bullish positions at this time. This is an aggressive trade with small positions. Our first target is $92.25. Our second target is $98.50. Our time frame is several weeks.

It was an interesting day for GS. The stock gapped open lower, dipped to $161.25 and then shot higher again closing in positive territory. Our plan is to buy calls on a breakout. I'm suggesting readers open small call positions (smaller than our normal trade size) at $166.75. If triggered our first target is $179.00. FYI: The Point & Figure chart is bullish with a $228 target.

Picked on August xx at $ xx.xx

Genesse & Wyoming - GWR - close: 31.38 change: -0.05 stop: 28.90

GWR held up pretty well. The railroad index lost 1.8% but GWR only gave up 0.15%. I am not suggesting new positions at this time but we can watch for another bounce from the $30.00 level.
Our first target is $32.90. Our second target is $34.75.

Hmm... more aggressive traders may want to buy this bounce. We have a trigger at $86.00 to buy calls. GWW dipped to $86.14 this morning and then when the morning bounce faded it dipped to $86.25 and rallied to its best levels of the day. This looks like a potential entry point and another higher low. I'm going to stick to our plan, which calls for waiting for a dip at $86.00 or a breakout over $90.00 (trigger @90.50). We want to trade smaller positions on the breakout. Our first target is $93.50. Our second target is $97.50.

Picked on August xx at $ xx.xx

IDEXX Labs - IDXX - close: 50.76 change: -0.24 stop: 49.75

IDXX tested support near $50.00 and its rising 30-dma. Readers may want to buy the afternoon bounce given our stop loss at $49.75 but I suggest waiting for a breakout over $52.00.

Currently our first target to take profits is at $54.90. Our second target is $58.00.

MTD tested its 10-dma again. I would wait for a dip near $86.50 or a new rise over $88.00 as our next entry point.
Our first target is $93.50. Our second target is $99.00. I am labeling this an aggressive play because volume is pretty light for this stock.

Profit taking in NEU was relatively light and shares consolidated sideways all day long. Right now the plan is to buy the second half of our call position on a dip at $80.50.

Our first target to take profits is at $88.50. Our second and final target is $92.50. FYI: The Point & Figure chart is bullish with a $116.00 target.

Picked on August 24 at $ 84.33

Occidental Petrol. - OXY - close: 73.10 change: -1.42 stop: 69.45

The sharp sell-off in China pushed commodities lower. Oil gave up $3 and closed under $70 a barrel. This pushed oil stocks lower. OXY fell toward $72.00 but was starting to rebound into the closing bell. I'm suggesting readers use the dip as another entry point. Our first target is $77.00. Our second target is $79.85.

Early morning weakness in the financials was enough to push STT to $51.70. We had a trigger to buy calls at $52.00. Our stop loss is now $49.45. Currently STT has a short-term trend of lower highs. If you don't want to buy this dip today then consider buying calls on a move over $53.50 or just wait for our breakout trigger at $55.60.

Now that our play is open our first target is $55.00. Our second target is $59.80. Currently the Point & Figure chart is bullish with a $62 target.

Nothing has changed for us. We're still waiting for a breakout over $30.00.

I am suggesting a trigger to buy calls at $30.55. If triggered our first target to take profits is $34.50. Our second target is $37.50. My time frame is about eight weeks.

Picked on August xx at $ xx.xx

U.S. Oil Fund - USO - close: 36.05 change: -1.61 stop: 34.49

Weakness in the commodities was a little unexpected but when the Chinese market fall almost 7% in one day investors were rushing to lock in gains. The USO gapped open lower at $36.57 and dipped to $35.80 at its worst levels. We had a trigger to buy calls at $36.50 so the play is now open. Our first target to take profits is at $39.95.

Chart:

Picked on August 31 at $ 36.50
Change since picked: - 0.45
Earnings Date 00/00/00
Average Daily Volume = 11.5 million
Listed on August 15, 2009

Valmont Ind. - VMI - close: 82.33 change: -2.51 stop: 79.45

Thankfully we didn't have to wait very long for VMI to pull back. The stock dipped to $81.95 and spent most of the day bouncing around the $82-83 zone. Our trigger to buy calls was hit at $82.00. Our first target is $88.00. I'm setting a second target at $94.00 but that might be a little too optimistic. Currently the Point & Figure chart is bullish with a $104 target.

FSLR flirted with a drop under the $120 level this morning. Shares hit $118.85 but bounced back pretty quickly. I am not suggesting new bearish positions at this time.
FSLR has already hit our first target at $122.50. Our second and final target is $111.00.

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

Research In Motion - RIMM - close: 73.06 chg: -0.77 stop: n/a

RIMM dipped to $72.00 before bouncing. Our entry zone to launch new strangles is the $74.50-75.50 range.
The options suggested were the September $80 calls (RFY-IP) and the September $70 puts (RFY-UN). Our estimated cost was $2.64. We want to sell if either option hits $6.00 or higher.

IBM fell to $116.92 this morning and eventually bounced back closed to unchanged for the session. The stock hit our trigger at $117.45. IBM has been churning sideways for over a month now. We may be better off waiting to buy a dip near $110 and its rising 100-dma before considering new positions (or a close over $121.00).

Chart:

Picked on August 24 at $120.25
Change since picked: - 2.80

CLOSED BEARISH PLAYS

Marvel Entertainment - MVL - close: 48.37 change: +9.72 stop: 39.05

It's days like today I'm happier owning puts than shorting stock. Anyone short MVL was in big trouble. Disney (DIS) announced they had signed a $4 billion deal to buy MVL. Shareholders of MVL stock will receive $30 in cash and 0.745 shares of DIS stock, which values MVL close to $50 a share. MVL gapped open at $48.60 and closed with a 25.1% gain. Our puts vanished into thin air but our risk was limited to what we paid for them.